In a recent move to bolster its financial position, Americas CarMart Inc. (NASDAQ:CRMT), a prominent auto dealership chain, has successfully raised approximately $5.6 million in net proceeds. This financial gain comes from the sale of 138,272 additional shares, priced at $43 each, as part of an over-allotment option exercised by underwriter Jefferies LLC.
The transaction, which took place on Monday, follows the company's previous issuance of 1.7 million shares in a public offering on September 19, 2024, from which it garnered net proceeds of roughly $67.8 million. The combined proceeds from both the initial offering and the over-allotment option exercise amount to approximately $73.4 million, after accounting for underwriting discounts and estimated offering expenses.
Americas CarMart initially provided the over-allotment option during the September public offering, allowing the underwriter to purchase additional shares within 30 days. The option aimed to cover over-allotments and brought the total shares sold to 1,838,272.
The shares were offered under the company's shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (SEC) on June 29, 2023, and declared effective on August 14, 2023. A final prospectus supplement detailing the offering was submitted to the SEC on September 19, 2024.
Americas CarMart, headquartered in Rogers (NYSE:ROG), Arkansas, operates within the retail-auto dealers and gasoline stations sector. The company's stock is traded on the NASDAQ Global Select Market under the ticker symbol CRMT.
In other recent news, America's Car-Mart (NASDAQ:CRMT) has reported significant developments. The company issued $300 million in asset-backed notes, marking its second securitization transaction in 2024. The company also reported a 5.2% decrease in revenues for the first quarter of fiscal year 2025, primarily due to a decline in retail unit sales.
In addition, America's Car-Mart appointed Jamie Fischer as its new Chief Operating Officer, aiming to strengthen dealership operations, inventory management, and marketing. The company also formed a strategic partnership with Cox Automotive to improve affordability and gross profit margins.
Furthermore, Jefferies, a global investment banking firm, revised its price target for America's Car-Mart shares, lowering it to $45.00 from the previous $68.00, while retaining a Hold rating on the stock.
The company also launched a public offering of 1.7 million shares at $43 each to enhance its liquidity, reduce its leverage, and strengthen its balance sheet. These are the latest developments in America's Car-Mart's ongoing efforts to navigate the dynamic auto retail market effectively.
InvestingPro Insights
Americas CarMart's recent capital raise comes at a critical time for the company, as revealed by several key metrics from InvestingPro. The company's stock is currently trading near its 52-week low, with a market capitalization of $326.62 million. This positioning reflects recent challenges, as evidenced by the significant price decline of 38.07% over the past three months.
InvestingPro data shows that Americas CarMart's revenue for the last twelve months stands at $1.37 billion, with a concerning revenue growth decline of 3.85%. The company's profitability is also under pressure, with a negative return on assets of -2.41% and a low gross profit margin of 14.96%.
Two InvestingPro Tips are particularly relevant in light of the recent share issuance:
1. The company is operating with a significant debt burden, which may explain the need for additional capital through share offerings.
2. Americas CarMart has been quickly burning through cash, further underscoring the importance of the recent capital raise.
These insights suggest that the $73.4 million in net proceeds from the share offerings could be crucial for addressing the company's financial challenges and potentially improving its cash position. Investors considering Americas CarMart may find value in exploring the additional 12 tips available on InvestingPro, which could provide a more comprehensive view of the company's financial health and prospects.
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